Shri Karni Kumar Khatry vs Shri Chain Sukh Betala and Others

K.N. Saikia, J.—The Petitioner in this criminal revision prays for quashing the proceedings, in case No. 1155C/83 now pending in the Court of the judicial Magistrate, Gauhati along with the order dated 4.7.83 passed therein issuing processes for appearance of the Petitioner and another accused to face trial and further directing the seizure of the Petitioner''s truck lorry RSF-635.

The opposite party No. 1, Shri Chain Suku Betala, a partner of M/s. Assam Motor Finance Company, filed a complaint against the Petitioner and another u/s 406/420 I.P.C. and Shri K.D. Phukan, Judicial Magistrate, Gauhati on 28.6.83 examined the opposite party No. 1 on oath and directed the said opposite party to produce witnesses on 6.7.83 for holding preliminary enquiry. The opposite party No. 1 instituted the instant case being case No. 1155C/83 by filing allegedly the same complaint petition once again in the Court of the Chief Judicial Magistrate, Gauhati and on 4.7.83, the said complaint petition having been endorsed to Shri J. Bora, Judicial Magistrate, Gauhati, the latter examined the opposite party No. 1 on oath and passed the impugned order for the issuance of processes for appearance of the Petitioner and the other accused in his Court on 25.8.83 to face trial on charge u/s 406 I.P.C. as also for the seizure of the Petitioner''s truck lorry RSF-635.

It has been stated in the instant complaint dated 4.7.83 that the complainant (opposite party No, 1) is a partner of M/s. (Assam, Motor Finance Company, S.R.C.B. Road, Fancybazar, Gauhati. The business of the company is to finance motor vehicles to the customers under the hire purchase agreement executed by the parties; that besides other conditions the hirer of the vehicle cannot remove the vehicle from the districts of Assam without the knowledge and consent of the Financer till full payment for the vehicle is made; that the accused No. 1 and 2 were businessmen of Bihpuria of North Lakhimpur district at the relevant time; they came to the office of the complainant at Fancybazar, Gauhati sometime in the early part of the year 1981 and requested the company to finance the vehicle No. RSF-635 and ultimately on 19.5.81 the two accused entered into an agreement with the complainant at the Company''s office at Gauhati in terms of which the complainant, in good faith and in the interest of their business, financed the above vehicle to the extent of Rs. 1,40,000,00; that the accused No. 2 stood as the guarantor for due repayment and observation of the conditions of the hire purchase agreement; that for some time the Petitioner, accused No. 1, was paying the monthly installments and was plying the vehicle within Assam. But later on he defaulted in payment of monthly installments and the complainant issued a registered A/D notice through their Advocate but the same was returned with the remark "left"; that on enquiry the complainant learnt that the accused No. 1 had closed down his business at Bihpuria and left with the vehicle for Chhabilighat in Bikaner district of Rajasthan without the knowledge and consent of the complainant; and that the Petitioner accused No. 1 was yet to repay Rs. 49,889,00. From the above facts it was alleged that (he accused persons bad criminally misappropriated the income of the vehicle and was depriving the complainant of the said income and that the accused persons had dishonest intention from the very date of the transaction to cheat the complainant and thus committed offence u/s 406/420 I.P.C.

When examined the complainant Shri Chain Sukh Betala stated on oath that he had got a business of finking vehicles on hire purchase; that the accused Karni Kumar Khairy and Hanwantmal Rathi came to his office and asked for financing the vehicle on hire purchase and on 19.7.81 the company financed RSF-633 on hire purchase; and that the amount of hire purchase war Rs. 1,40,000.00. He further stated that both the accused repaid Rs. 63,100/- but had not paid ten installments and for away with the vehicle to Rajasthan wherefore the case was field. On the above materials the impugned order issuing processes and directing seizure of the vehicle was passed.

Mr. T.C. Khetri, the learned Counsel for the petition submits, inter alia, (i) that this complaint case No. 1155. C/83 is not maintainable because of the pendeny of the earlier complaint case (ii) that even if the allegations made in the complaint petition are wholly believed, no offence will be disclosed in it and (iii) that the Court of the Judicial Magistrate at Gauhati has no jurisdiction to entertain the instant complaint case.

Mr. J.M. Choudhury, the learned Counsel for the complainant-opposite party, submits that the instant complaint case is maintainable despite the other complaint case having not been decided; that the complaint clearly discloses the ingredients of Sections 406 arid 420 I.P.C., inasmuch as there was entrustment of the vehicle to the Petitioner and another who dishonestly used the same after stopping1 payment of the due installments and taking the vehicle out of Assam; and that the opposite party''s business being located at Gauhati and the hire purchase agreement having been entered into at Gauhati the Judicial Magistrate''s Court at Gauhati has territorial jurisdiction to entertain the complaint case.

As regards the maintainability of the instant complaint case by reason of the pendency of the other complaint case, if would be seen from the copy of the order sheet in Case No. 1159C/83 that on 28.6.83 the learned Judicial Magistrate, Shri. K.D. Phukan, examined the complainant on oath and was ordered to produce his other with nesses on 6.7.83 for preliminary evidence. But on that date the complainant was absent without steps and as such 7.7.83 was fixed for orders. On 7.7.83 the complainant was absent without steps and the case was filed. The instant complaint being Case No. 1155C/83 appears to have been filed on 4.7.83 on which date the complainant''s statement was taken by the learned Judicial Magistrate, Shri J. Bora, who fixed 25.8.83 for appearance. The Petitioner, however, has not field a copy of the complaint petition of Case No. 1159C/83, and as such, it is not possible to bold that both the complaints are the same or regarding the same facts. It cannot, therefore, be held that the instant petition is not maintainable by reason of the other complaint case having been filed.

As regards jurisdiction of the Judicial Magistrate''s Court at Gauhati, Section 181(4) of the Code of Criminal Procedure provides that any offence of criminal misappropriation or of criminal breach of trust may be inquired into or tried by a Court within whose local jurisdiction the offence was committed of any part of the property which is the subject of the offence was received or retained, or was required to be returned or accounted for, by the accused person. In the instant case the hire purchase agreement financing the vehicle RSF-635 was admittedly entered into at the opposite party''s place of business Gauhati and the vehicle was the subject matter of the agreement and; as such, it can be taken to have been received at Gauhati. The installments admittedly were payable and accounted for at the complainant''s business office at Gauhati. So the Magistrate''s Court at Gauhati has jurisdiction to entertain a complaint involving the vehicle.

The next question is the liability of the proceeding to be quashed. Section 405 I.P.C. defines Criminal breach of trust as follows:

Whoever, being in any manner entrusted with property, or with any dominion over property, dishonestly misappropriates or converts to his own use that property, or dishonestly uses or disposes of that property in violation of any direction of law prescribing the mode in which trust is to be discharged or of any legal contract, express or implied, which he has made touching the discharge of trust, or willfully suffers any other person so to do, commits, criminal breach of trust.

Under Section 415 of the I.P.C. ''cheating'' has been defined as under:

Whoever, by deceiving any person, fraudulently or dishonesty induces the person so deceived to deliver any property to any person: or to consent that any person shall retain any property, or intentionally induces the person deceived to do or omit to do anything which he would not do or omit if he was not so deceived, and which act or omission causes or is likely to cause damage or harm to that person in body, mind, reputation or property, is said to ''cheat''.

Explanation- A dishonest concealment of facts is a deception within the meaning of this Section.

Under Section 420 I.P.C.: "Whoever cheats and thereby dishonestly induces the person deceived to deliver any property to any person, or to make, alter or destroy that whole or any part of a valuable security, or anything which is signed or sealed, and which is capable of being converted into a valuable security, shall be punished with imprisonment of either description for a terra which may extend to seven years, and shall also be liable to fine".

In tie instant case admittedly the hire purchase agreement was entered into between the Petitioner and the opposite party on 19.7.81 where under the complainant opposite party financed the said vehicle on hire purchase to the extent of Rs. 1,40,000/- . The Petitioner already paid monthly installments amounting to Rs. 63,100/. Admittedly one of the conditions of hire purchase was to repay in monthly installments and the other was to ply the vehicle within the State of Assam and not to take it outside the State. The obligation is, therefore, ex-contractu and the foundation of the liability being the contract it is a pure and simple civil obligation the violation whereof ipso facto would entail a civil, and not and criminal, liability.

Admittedly under the hire purchase agreement the ownership of the vehicle would not be acquired by the Petitioner until the last installment was paid to the complainant. It has not been denied that out of Rs. 1,40,000/- the Petitioner repaid only Rs. 63,000/-and was yet to repay the balance of Rs. 49,389.00. It has also not been denied that the Petitioner under the terms of the agreement was now allowed to ply the vehicle outside the State of Assam. The allegations in the complaint read with the statement of the complainant is that the Petitioner has closed his business at Bihpuria and left with the vehicle to Chhabilighat in Bikaner district of Rajasthan without the knowledge and consent of the complainant-opposite party and thereby criminally misappropriated the income of the vehicle depriving him from the income of the same and that the complainant has come to know that the accused persons had dishonest intention from the very date of the transaction to cheat the complainant.

As we have seen, only processes have been issued and order for seizure of the, truck has been passed. As was ruled in Vadilal Panchal Vs. Dattatraya Dulaji Ghadigaonker and Another, when a Magistrate directs an inquiry u/s 202 of I.P.C. for ascertaining the truth or falsehood of a complaint. Section 203 makes it clear that the judgment which the Magistrate has to form must be based on the statements of the complainant and his witnesses and the result of the investigation or inquiry. But, the judgment which the Magistrate has to form whether or not there is sufficient ground for proceeding. This does not mean, that the Magistrate is bound to accept the result of the, inquiry or investigation or that be must accept any plea that is set up on behalf of the person complained against. The Magistrate must apply his judicial mind to the materials on which he has to form his judgment. In arriving at his judgment he is not fettered in any way except by judicial considerations.

In Smt. Nagawwa Vs. Veeranna Shivalingappa Konjalgi and Others, it has been ruled that at the stage of issuing process the Magistrate is mainly concerned with the allegations made in the complaint or the evidence led in support of the same and he is only to be prima facie satisfied whether there are sufficient grounds for proceeding against the accused. It is not the province of the Magistrate to enter into detailed discussion of merits or de-merits of the case nor can the High Court go into this matter in its revisional jurisdiction which is a very limited one. The scope of the inquiry u/s 202 is extremely limited only to the ascertainment of the truth or falsehood of the allegations made in the complaint: (i) on the materials placed by the complainant before the Court; (ii) for the limited purpose of finding out whether a prima facie case for issue of process has been made out; and (iii) for deciding to question purely from the point of view of the complainant without at all adverting to any defense that the accused may have, In fact, in proceedings u/s 202 the accused has got absolutely no locus standi and is not entitled to be beard on the question whether the process should be issued against him or not. In coming to a decision as to whether a process should be issued the Magistrate can take into consideration inherent improbabilities appearing on the face of the complaint or in the evidence led by the complainant in support of the allegations but there appears to be a very thin line of demarcation between a probability of conviction of the accused and establishing of a prima facie case against him that Magistrate has been given an undoubted discretion in the matter and the discretion has to be judicially exercised by him Once the Magistrate has exercised his discretion it is not for the High Court, or even the Supreme Court to substitute its own discretion for that of the? Magistrate the or to examine the case on merits with a view to find out whether or not the allegations in the complaint, if proved would ultimately end in conviction of the accused. These const durations are totally foreign to the scope and ambit of an inquiry u/s 204 of the Code. Their Lordships held that in the following cases an order of the Magistrate issuing process against the accused can be quashed or set aside:

(1) Where the allegations made in the complaint or the statement of the witnesses recorded in support of the tame taken at their face value make out absolutely no case against the accused or the Complaint does not disclose the essential ingredients of an offence which is alleged against the accused;

(2) Where the allegations made in the complaint are potently absurd and inherently improbable so that no prudent person an ever reach a conclusion that there is sufficient ground for proceeding against the accused;

(3) Where the discretion exercised by the Magistrate in assuring process is capricious and arbitrary having been based either on no evidence or on materials which are wholly irrelevant or inadmissible; and

(4) Where the complaint suffers from fundamental legal defects, such as, want of sanction, or absence of a complaint by legally competent authority and the like.

So also in Hareram Satpathy Vs. Tikaram Agarwala and Others, it has been held that where the Magistrate after taking cognizance of the offence and perusal of the record and having been satisfied that there were prima facie grounds for issuing process against certain persons sons not mentioned in the police report, issued process against them, the Magistrate could not be said to have exceeded the power vested to him under law. As the Magistrate is restricted to finding out whether there is a prima facie case or not for proceeding against the accused and cannot enter into a detailed discussion of the merits or demerits of the case and as the scope of the revisional jurisdiction is very limited the High Court cannot launch on a detailed and meticulous examination of the case on merits and set aside the order of Magistrate directing issue of process against certain persons, In P. Vijayapal Reddy and Others Vs. The State, it has similarly been held that the High Court does not ordinarily interfere at an interlocutory stage of and criminal proceeding pending in a subordinate Court. The inherent powers possessed by it u/s 482 Code of Criminal Procedure can be invoked and exercised only when the facts alleged in the complaint if they are accepted to be correct at their face value, do dot make out an offence with which the accused is charged. The High Court can refuse to exercise its inherent powers u/s 482 Code of Criminal Procedure to quash the criminal proceedings when some evidence is necessary to determine the question as to whether the offence has been committed or not and when necessary evidence was still to be recorded, that was not a case where even the Supreme Court would interfere under Article 136. In Madhu Limaye Vs. The State of Maharashtra, the principles for exercise of the inherent power of the High Court have been succinctly stated namely, (i) That the power is not to be resorted to if there is a specific provision in the Code for the redress of the grievance of the aggrieved party; (ii) That it should be exercised very sparingly to prevent abuse of process of any Court or otherwise to secure the ends of justice; (iii) That it should not be exercised as against tie express bar of law engrafted in any other provision of the Code. Keeping in mind the foregoing guideline the facts of the instant case may be examined.

From the complaint and the statement of the complainant only two facts can be found, namely, failure to pay the remaining ten installments and taking of the vehicle out of Assam to Chhabilighat in Bikaner District without the knowledge and consent of the complainant. It was held in S. Mitter v. The State 61 Calcutta Weekly Notes 210 that a mere failure to pay the installments of hire following hire-purchase agreement on the basis of which the accused was entitled to keep and possess the article which was the subject matter of hire provided ho fulfilled the other conditions of contract, will not make out a case of criminal breach of trust. Mere breach of hire agreement without more cannot form the subject matter of a criminal charge.

It is settled that in a hire purchase agreement the ownership of the vehicle remains with the seller until its price is fully repaid in installments where after the property is transferred to the purchaser. The vehicle is handed over to toe purchaser to be used in accordance with the terms of the agreement. There is thus an element of entrustment until its price is fully repaid in installments. In Mohd. Sulaiman Vs. Mohd. Ayub and Another, hired a motor which remained in his use for sometime and hire-charges were paid for some months. He wrote a letter to the owner of the motor stating that he had purchased the motor for Rs. 600.00 on condition that the same would be tried for three months and if it was found satisfactory the money would be paid and the purchase completed and that be had paid Rs. 620.00 in all and the purchase was completed. The owner denied any such agreement as was alleged by M to have been made, denied the payment and filed a complaint that by writing the letter M had committed criminal breach of trust. It was contended by the owner that since M had dishonestly misappropriated or converted to his own use the motor ho was guilty within first part of Section 405. It was further urged that even otherwise, M must be held to have dishonestly used or disposed of the motor in violation of the legal contract, express or implied, which he had made touching the discharge of such trust because of the letter. It was held, (i) of the motor was handed over to M for his own use even according to the case of the owner. The letter showed change in the use of the motor. Therefore, it could not be said that by merely writing that letter M dealt with the property in such manner as would amount to its misappropriation or conversion to his own use by him. (ii) Section 405 contemplates something being done with respect to the property which would indicate either misappropriation or conversion or its use or disposal in violation of the contract, express or implied. The use of the motor was the same before the letter as well as letter it and thus nothing was done with respect to the use of the entrusted property (the motor) which was not in accordance with the hiring agreement between parties. Therefore, it could not be said that there was misappropriation or conversion of the property or its use or disposal in violation of the contract. The letter merely raised a dispute and there was no question of, any criminal breach of trust with respect to the motor on the basis of that letter.

The word ''entrusted'' in Section 405 is not a terra of law. It is an ordinary word in common use, and it may have different implications in different contexts. In its most general significance all it imports is a handing over of the possession for some purpose which may not imply conferring any proprietary right at all. In a transaction between a hirer and hire there is an element of trust implied in the transaction. The ingredients pf the offence u/s 405 I.P.C. are: (1) There should be an entrustment by one person to another of the property, or with any dominion over property; (2) such entrustment must be in trust; (2) there must have been a misappropriation or conversion to his own use by the person who receives the property in trust; and (4) such conversion or retention of the property must be against or in violation of any direction or law prescribing the mode in which such trust is to be discharged or of any legal contract made touching the discharge of such trust. There is a distinction between criminal breach of trust and cheating. In case of cheating the dishonest intention starts with the very inception of the transaction. Hut in the case or criminal breach of trust, the person who comes into possession of the movable property receives it legally, but illegally retains it or converts it to his own use against the terms of the contract.

In the instant case the allegation that the Petitioner bad dishonest intention from the very beginning has been belied by the fact that he has already repaid more than Rs. 63,000/-and was yet to pay only ten more installments. Dishonest intention might, however, occur when the payment of installment was stopped and without the knowledge and consent of the complainant the vehicle was taken out of Assam to Chhabilighat in Bikaner District. Mere non-payment of installments would not give rise to any criminal liability and if the hire purchaser is criminally prosecuted for mere non-payment of installment it would amount to abuse of the process of the Court. Thus in Sardar Trilok Singh and Others Vs. Satya Deo Tripathi, the dispute between the parties related to the purchase of a truck by the complainant. A hire purchase agreement was entered into between the Respondent and a Finance Corporation. the loan was payable in monthly installments. According to the agreement, on default of any one installment the financier had the right to terminate the hire-purchase agreement even without notice and seize the truck. The complainant''s case was that only a blank form was got signed by him. His further case was that on default of the third installment the truck was forcibly seized and removed by the Appellants. The Respondent filed a complaint against the Appellants in this connection for certain offences. After enquiry the Magistrate directed the issue of summons. The Appellants moved an application u/s 482, Code of Criminal Procedure. Their case in the nutshell was that the Respondent''s case that they had commuted any offence was absolutely false and the proceedings should be quashed. It was held that the proceeding initiated was clearly an abuse of the process of the Court. It was not a case where any process ought to have been directed to be issued against the accused Appellants. On the well-settled principles of law it was a very suitable case where the criminal proceeding ought to have been quashed by quashed by the High Court in exercise of its in he rent power. The dispute raised by the Respondent was purely of a civil nature even assuming the facts stated by him to be substantially correct.

In the instant case the vehicle had to be plied within the State of Assam, but in violation of that condition it was taken away to Chhabilighat in Bikaner District, Rujasthan. Simultaneously the payment of installments was also stopped. Under such circumstances whether there was any dishonesty in taking away the vehicle to Chhabilighat and its playing thereat would depend on the facts of the case to be proved by evidence. It is not denied that such taking away and plying at Chhabilighat in Bikaner was contrary to the terms of the hire purchase agreement which the Petitioner made touching discharge of the trust. It is not the law that during the tenure of a hire purchase agreement no criminality may arise at all. So long the price of the vehicle is not fully repaid the element of trust remains and if the hirer breaks that trust he may be liable for criminal breach of trust u/s 405 I.P.C.

On the facts and circumstances discussed above, when the learned Magistrate had only issued process and ordered the seizure of the vehicle on the complaint, it cannot be said either that there is abuse of the process of the Court or that the Court has acted beyond jurisdiction. This Court will not substitute its own judgment for that of the Magistrate at this stage, This petition is accordingly found to be without merit and it is rejected. The interim orders passed by this Court as to the custody of the vehicle (RSF-635) stand vacated.